Understanding distribution chains is core to understanding the business of fashion. We will discuss wholesale, retail, online and other business models.

Since the last five years I have been studying the fashion industry distribution chains and have made good number of successes and failures.

Starting your fashion brand is not just buying a piece of garment and trying to sell it, we need to understand what sells where and where can we make the best margin, according to the products we have.

I will give you a simple example.

Let us assume, you took some hoodies from a clothing manufacturer, and are now looking to sell them in the local market. Depending from where you are, you would ideally have four markets/mediums to sell.

1) To a distributor:

A distributor sells the products to other wholesalers. So the product travels from

As every hand changes, money is made. In the end the product has to be priced good enough with respect to the customer to buy it or if the price keeps increasing, just midway, for example the retailer would tell us that the product is too highly priced to sell.

2) To a wholesaler:

Manufacturer -> You -> Wholesaler -> Retailer -> Customer.

Much better than the first one, though still in my opinion, only clothing manufacturers are able to have margins to play this game. Still, as the global economy opens up, you never know what product can be bought at what price and sold at a different location in wholesale for you to make a profit.

3) Manufacturer -> You -> Retailer -> Customer.

This is a very ideal business. There is good amount of margin (on average of 5% to 10%) money to be made.

4) Manufacturer -> You -> Customer.

This can work if you have your own online store or if you have a garment shop. This also works for many people who are looking to sell to their friends and organisations. The margin is good and is one of the oldest forms of business in the world.

Now that we have understood these distribution chains, we can plan accordingly and understand what products should we introduce in the market. Understanding this chain is important for newbies as they need to understand how distribution works and money flows in the fashion industry.

Understanding distribution chains is core to understanding the business of fashion. We will discuss wholesale, retail, online and other business models.

Since the last five years I have been studying the fashion industry distribution chains and have made good number of successes and failures.

Starting your fashion brand is not just buying a piece of garment and trying to sell it, we need to understand what sells where and where can we make the best margin, according to the products we have.

I will give you a simple example.

Let us assume, you took some hoodies from a clothing manufacturer, and are now looking to sell them in the local market. Depending from where you are, you would ideally have four markets/mediums to sell.

1) To a distributor:

A distributor sells the products to other wholesalers. So the product travels from

As every hand changes, money is made. In the end the product has to be priced good enough with respect to the customer to buy it or if the price keeps increasing, just midway, for example the retailer would tell us that the product is too highly priced to sell.

2) To a wholesaler:

Manufacturer -> You -> Wholesaler -> Retailer -> Customer.

Much better than the first one, though still in my opinion, only clothing manufacturers are able to have margins to play this game. Still, as the global economy opens up, you never know what product can be bought at what price and sold at a different location in wholesale for you to make a profit.

3) Manufacturer -> You -> Retailer -> Customer.

This is a very ideal business. There is good amount of margin (on average of 5% to 10%) money to be made.

4) Manufacturer -> You -> Customer.

This can work if you have your own online store or if you have a garment shop. This also works for many people who are looking to sell to their friends and organisations. The margin is good and is one of the oldest forms of business in the world.

Now that we have understood these distribution chains, we can plan accordingly and understand what products should we introduce in the market. Understanding this chain is important for newbies as they need to understand how distribution works and money flows in the fashion industry.